FB: SDLT relief for Freeports
FB: SDLT relief for Freeports
The Finance Bill sets out the detail as to how the SDLT relief will work.
The Freeport bidding prospectus launched in November 2020 set out the Government’s intention to establish “new, innovative Freeports that will boost the economy, create thousands of jobs and turbo-charge post-Brexit trade”. The prospectus contained plans for a number of tax incentives including stamp duty land tax (SDLT) relief on land purchases within ‘Freeport tax sites’ in England. Finance Bill 2021 sets out the detail as to how the SDLT relief will work.
The relief will be available for transactions involving ‘qualifying Freeport land’ with an effective date on or before 30 September 2026. The relief must be claimed in a land transaction return and cannot be claimed any later than 14 October 2027.
In order to be ‘qualifying Freeport land’, the land must be situated in a ‘Freeport tax site’ and be purchased with the intention that it will be used exclusively in a ‘qualifying manner’.
A ‘qualifying manner’, means that the land will be:
- Used by the purchaser in the course of a commercial trade or profession;
- Developed / redeveloped by the purchaser for use by anyone in the course of a commercial trade or profession;
- Used as a source of rents, providing those rents will be generated by someone using the property for a commercial trade or profession; or
- Any combination of the above.
The relief explicitly excludes any residential property.
The relief is not available if a purchaser is acquiring any interest in land for resale without development or redevelopment.
Where a property acquired is a mixture of ‘qualifying Freeport land’ and other property:
- If more than 90 percent of the consideration is apportioned to the ‘qualifying Freeport land’, full relief from SDLT is available;
- If less than 90 percent but more than 10 percent of the consideration is apportioned to the ‘qualifying Freeport land’, SDLT relief is available on the qualifying proportion; and
- If less than 10 percent of the consideration is apportioned to the ‘qualifying Freeport land’, then no relief is available.
The consideration must be apportioned on a just and reasonable basis.
The relief is subject to clawback if, broadly, within three years of acquiring the land it is not being used exclusively in a ‘qualifying manner’. However, allowances are made both where reasonable steps are being taken to use the land in a ‘qualifying manner’, and where the reason the land is not being used in a ‘qualifying manner’ is beyond the control of the purchaser.
For further information please contact :
© 2021 KPMG LLP a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.